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8 F.

3d 152
62 USLW 2306, 28 U.S.P.Q.2d 1707

SANTANA PRODUCTS, INC.


v.
COMPRESSION POLYMERS, INC.; Sanatec Industries, Inc.;
Delbert P. Keisling, Jr.; Alan P. Keisling, Appellants.
No. 93-7099.

United States Court of Appeals,


Third Circuit.
Argued Sept. 15, 1993.
Oct. 29, 1993.

James J. Kutz (argued), Mark D. Bradshaw, Eckert Seamans Cherin &


Mellott, Harrisburg, PA, Richard V. Westerhoff, Eckert Seamans Cherin
& Mellott, Pittsburgh, PA, for appellants.
William E. Jackson (argued), B. Aaron Schulman, Larson & Taylor,
Arlington, VA, Gerald J. Butler, Solfanelli, Butler & LaBelle, Scranton,
PA, for appellees.
Before: MANSMANN, GREENBERG, and WEIS, Circuit
Judges.OPINION OF THE COURT
GREENBERG, Circuit Judge.

I.
FACTUAL AND PROCEDURAL HISTORY
1

This appeal raises a jurisdictional issue which seems not to have been addressed
by any court of appeals in a reported opinion. The issue is whether an
interlocutory district court order directing the Commissioner of Patents and
Trademarks to cancel a trademark registration, in an action in which the
Commissioner is not a party, is an injunction within 28 U.S.C. 1292(a)(1) and
therefore immediately appealable. We conclude that it is not an injunction, and

thus we will dismiss this appeal as it has been taken from such an order. In
view of this disposition, we need only summarize the background of the case.
2

The plaintiff-appellee, Santana Products, Inc., manufactures restroom


partitions, which it markets under the name "Santana." Though Santana
Products claims to have used the "Santana" mark on partitions since 1979 and
has registered its mark with the Department of State of the Commonwealth of
Pennsylvania, it has not registered the mark with the United States Patent and
Trademark Office. The defendant-appellant, Compression Polymers, Inc., also
makes restroom partitions and, in keeping with its practice of naming products
with the ending "tec," has marketed its restroom partitions under the name
"Sanatec." Compression Polymers registered this name on August 14, 1990,
with the United States Patent and Trademark Office for use with "Polyethylene
Toilet and Urinal Partitions." In its federal application, Compression Polymers
indicated that it first used this mark around October 27, 1989.

On February 1, 1991, Santana Products brought this action against


Compression Polymers.1 In an amended complaint, Santana Products sought
relief in five counts: (I) unfair competition under section 43(a) of the Federal
Trademark Act, 15 U.S.C. 1125(a); (II) infringement of a state registered
mark (state law claim); (III) infringement of a mark and a trade name valid at
common law (state law claim); (IV) dilution (state law claim); and (V)
cancellation of Compression Polymers' federal registration pursuant to 15
U.S.C. 1119. Santana Products subsequently filed a motion for partial
summary judgment on Count V, the claim for cancellation. The district court
referred Santana Products' motion to a magistrate judge, who issued a report
recommending that the motion be denied.

Santana Products filed objections to the report. On February 2, 1993, the


district court issued its opinion disagreeing with the magistrate judge on the
cancellation issue. Accordingly, the district court ordered the Commissioner of
Patents and Trademarks to cancel Compression Polymers' registration. This
order, however, did not terminate the action, as the other counts of the
complaint are still pending and Compression Polymers has filed a counterclaim,
which also is pending.

II.
DISCUSSION
5

The parties correctly agree that we do not have jurisdiction pursuant to 28


U.S.C. 1291 as a final judgment has not been entered in the district court.

Compression Polymers argues, however, that we have jurisdiction pursuant to


28 U.S.C. 1292(a)(1) because the district court's order directing the
Commissioner of Patents and Trademarks to cancel its federal registration is
injunctive in nature.
6

The order of February 2, 1993, from which the appeal has been taken, recites in
material part:

7 motion of [Santana Products] for partial summary judgment as to Count V of the


the
amended complaint is granted, and the Commissioner of Patents and Trademarks is
directed to cancel the defendants U.S. Trademark Registration No. 1,609,803 to the
extent that it is related to restroom partitions....
8

While the order does not state expressly that the court is entering an injunction,
this omission does not in itself compel us to conclude that it is not an
injunction, as "we are not constrained by the district court's characterization of
its order." See Bailey v. Systems Innovation, Inc., 852 F.2d 93, 96 (3d
Cir.1988). Rather, our crucial inquiry is as to the practical effect of the order.
See New Jersey State Nurses Ass'n v. Treacy, 834 F.2d 67, 69 (3d Cir.1987)
("certain orders not explicitly styled as injunctions may have injunctive effect").

We quite naturally refer to our in banc opinion in Cohen v. Board of Trustees of


University of Medicine & Dentistry, 867 F.2d 1455 (3d Cir.1989), for guidance
in determining whether an order may be considered injunctive within 28 U.S.C.
1292(a)(1). In Cohen we recognized that not all orders which grant a party
relief and which may be enforced by civil contempt are injunctive. For
example, an order compelling discovery is not injunctive, even though it might
be enforced by contempt. Rather, we stated that to be injunctive for purposes of
section 1292, the order must grant or deny a party the ultimate relief sought by
it. Id. at 1464. But we acknowledged that this factor alone is too broad a basis
on which to determine that the court has issued an injunction, for it could
describe an order in an action at law. Thus, we stated:

10 chief distinction between actions at law and actions in equity seeking injunctive
The
relief, thus lies in the mode of execution. Equity acts on the person, who can be held
in contempt for noncompliance.
11

Id. at 1465.

12

Therefore, an injunctive order for purposes of section 1292(a)(1) "must not


only adjudicate some of the relief sought in the complaint; it must also be of
such a nature that if it grants relief it could be enforced pendente lite by

contempt if necessary." Id. (citing 16 Charles A. Wright et al., Federal Practice


& Procedure 3922, at 29 (1977)). Accordingly, we developed a three-part test
for determining when an order is injunctive:
13 far, injunctions have been defined negatively by delineating orders that are not
Thus
injunctive. For purposes of 28 U.S.C. 1292(a)(1), injunctions may be affirmatively
defined as follows:
14
Orders
that are directed to a party, enforceable by contempt, and designed to accord
or protect 'some or all of the substantive relief sought by a complaint' in more than a
[temporary] fashion.
15

Id. at 1465 n. 9 (emphasis added) (quoting 16 Federal Practice & Procedure


3922, at 29).

16

The district court's order only satisfies the last of these requirements.
Significantly, the district court's order is not directed to Compression Polymers,
but rather to the Commissioner of Patents and Trademarks. Thus, in some ways,
it is analogous to the traditional security devices such as attachment and
replevin. See 16 Federal Practice & Procedure 3922, at 43 ("Enforcement of
the traditional security devices of attachment and replevin is ordinarily thought
not to involve an injunction within the meaning of the statute."). Moreover, and
probably more importantly, the order is not enforceable by contempt against
Compression Polymers. Rather, as we discuss below, Compression Polymers
can continue to use the disputed trademark during the course of the litigation
without risk of being held in contempt, though it may be liable in damages for
that use. Accordingly, the district court's order is not injunctive in nature, and
we lack jurisdiction.

17

Compression Polymers controverts this conclusion, contending that inasmuch


as the order is immediately enforceable2 and negatively affects its rights, the
order is injunctive. However, these circumstances in themselves do not mean
that the order is an injunction. Under Cohen, the critical inquiry is whether the
relief granted by the order can be enforced pendente lite through contempt.
Cohen, 867 F.2d at 1465.

18

In fact, the order does not compel Compression Polymers to take any action nor
does the order restrain it from doing anything. Thus, Compression Polymers
cannot be held in contempt for failing to comply with the order because the
order contains no provisions with which it must comply. The order is thus
somewhat similar to that of the district court in American Motorists Ins. Co. v.
Levolor Lorentzen, Inc., 879 F.2d 1165, 1172-73 (3d Cir.1989), which we

declined to treat as an injunction under 28 U.S.C. 1292(a)(1). In American


Motorists we held that a district court order "effectively" defining an insurance
company's duty to defend a claim was not appealable inasmuch as it "did not
order the company to undertake [anything]" and thus could not be enforced
pendente lite by contempt. 879 F.2d at 1172-73. In fact, Compression Polymers'
claim for jurisdiction under 28 U.S.C. 1292(a)(1) is even weaker than the
basis for jurisdiction to appeal predicated on the entry of an injunctive order
considered in American Motorists. After all, the district court did not even
suggest that Compression Polymers could not continue to use the mark.
Therefore the court, unlike the district court in American Motorists, did not
define the appellant's, i.e., Compression Polymers' duties.
19

While we could rest our conclusion on the foregoing reasoning, it is appropriate


to observe that a party's right to use a trademark is not dependent on its
registration. Thus, in In re McGinley, 660 F.2d 481, 484 (C.C.P.A.1981), the
Court of Customs and Patent Appeals stated that the Patent and Trademark
Office's refusal to register a person's trademark "does not affect his right to use
it." In Volkswagenwerk Aktiengesellschaft v. Wheeler, 814 F.2d 812 (1st
Cir.1987), the Court of Appeals for the First Circuit, after citing McGinley,
stated, "as this court has held, the cancellation of a trademark registration does
not extinguish common law rights the registration did not create." Id. at 819. It
therefore follows that inasmuch as the right to use the mark arises from prior
use, and not from federal registration, Compression Polymers will not lose its
right to use the mark simply because of the cancellation of its registration.
Indeed, Santana Products acknowledges in its letter addressing our jurisdiction
that Compression Polymers "has not been ordered to do anything and it is free
to continue its use of the trademark 'Sanatec' until it is permanently enjoined."

20

Compression Polymers cites Wrist-Rocket Mfg. Co. v. Saunders Archery Co.,


516 F.2d 846 (8th Cir.), cert. denied, 423 U.S. 870, 96 S.Ct. 134, 46 L.Ed.2d
100 (1975), in support of its contention that we have jurisdiction. In WristRocket, a trademark infringement case with related claims, the parties appealed
from the district court's order resolving liability issues on certain claims even
though damages issues remained open. The court of appeals held that it did not
have jurisdiction to review the district court's order with respect to these issues,
but that it did have "jurisdiction, pursuant to 28 U.S.C. 1292(a)(1), to examine
the merits of that part of the order granting to the appellee a permanent
injunction [against the use of the trademark] and ordering the cancellation of
the appellant's registration." Id. at 849 (footnote omitted). Thus, Wrist-Rocket
is distinguishable from this case, because the district court in Wrist-Rocket
issued an injunction forbidding the use of the mark. There is no suggestion in
Wrist-Rocket that the court would have exercised jurisdiction in the absence of

the injunction, which unquestionably was appealable.3


21

In view of the aforesaid the appeal will be dismissed.

22

MANSMANN, Circuit Judge, dissenting.

23

I respectfully dissent because I disagree with the conclusion reached by the


majority that the cancellation of a federally registered trademark is not
immediately appealable and that we, therefore, lack jurisdiction in this case.
Because I find that the district court's order directing the Commissioner of
Patents and Trademarks to cancel Compression Polymer's federal trademark
registration is injunctive in nature and in practical effect, I would conclude that
we have jurisdiction over this appeal pursuant to 28 U.S.C. 1292(a)(1).

24

Section 1292(a)(1) provides that the courts of appeals shall have jurisdiction of
appeals from "[i]nterlocutory orders of the district courts of the United States ...
granting, continuing, modifying, refusing or dissolving injunctions...." Our
jurisdiction pursuant to 1292(a)(1) extends to the review of "orders that grant
or deny injunctions and orders that have the practical effect of granting or
denying injunctions and have 'serious, perhaps irreparable, consequence.' "
Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271, 287-88, 108
S.Ct. 1133, 1142-43, 99 L.Ed.2d 296 (1988) (emphasis added) (citing Carson v.
American Brands, Inc., 450 U.S. 79, 83, 101 S.Ct. 993, 996, 67 L.Ed.2d 59
(1981)). See also United States v. Santtini, 963 F.2d 585, 590 (3d Cir.1992). To
fall within the scope of 1292(a)(1) and be deemed an "injunction", the order
must be directed to a party, enforceable by contempt and designed to accord or
protect some or all of the substantive relief sought by a complaint. Id. at 591.
As we concluded in Cohen v. Board of Trustees, 867 F.2d 1455 (3d Cir.1989)
(en banc), the "label" put on the order by the district court does not prevent us
from treating it as an injunction for purposes of 1292(a)(1). Id. at 1466
(citations omitted.)

25

Thus, as the majority observes, the fact that the district court's order here does
not expressly state that the court is entering an injunction does not compel the
conclusion that the order is not an injunction, as "we are not constrained by the
district court's characterization of its order," Bailey v. Systems Innovation, Inc.,
852 F.2d 93, 96 (3d Cir.1988); New Jersey State Nurses Assoc'n v. Treacy, 834
F.2d 67 (3d Cir.1987). Rather, our inquiry must focus on the practical effect of
the district court's order.

26

Here, the practical effect of the district court's order directing the

Commissioner of Patents and Trademarks to cancel Compression Polymer's


trademark registration is the granting of an injunction to Santana Products. In
addition to claims of unfair competition, infringement of state trademark (both
statutory and at common law) and dilution of Santana's business reputation,
Santana Product's complaint sought cancellation of Compression Polymer's
federal trademark registration. Thus, the district court order grants precisely to
Santana Products an important aspect of the ultimate relief it seeks.
27

In addition, the order is susceptible of enforcement by contempt. As the


majority observes, the order is not directly enforceable by contempt pendente
lite against Compression Polymers. It is the Commissioner of Patents and
Trademarks that would be the subject of contempt for failure to comply with
the district court's order. This fact, however, does not alter my view that the
order is injunctive in both nature and effect.1 Compression Polymers should not
have to rely on the Commissioner's willingness to risk contempt in order for
Compression Polymers to have the dissolution of its trademark right reviewed
on appeal.

28

The majority's conclusion that the district court's order "does not compel
Compression Polymers to take any action, nor does the order restrain it from
doing anything" exalts form over substance and turns a blind eye to the fact that
Compression Polymers is denied the use of its federally registered trademark
(federal statutory trademark protection) as effectively as if it were expressly
enjoined by the district court from using its federal trademark. The practical
effect of the district court's cancellation order is that Compression Polymers is
prohibited from representing that it enjoys the benefits and protection of federal
trademark registration as surely as if an injunction had been granted to Santana
Products.2

29

Santana Products sought summary judgment with respect to its claim for
cancellation of Compression Polymers' mark without seeking summary
judgment relating to the trademark infringement, unfair competition and
dilution claims. Clearly, the district court's order requiring cancellation of
Compression Polymers' mark provided significant and substantive relief to
Santana Products. Indeed, because of the district court's grant of partial
summary judgment in its favor, Santana Products has been able, through
strategic piecemeal litigation, to achieve one of its ultimate goals in this lawsuit,
that is, the prevention of Compression Polymers' use of "Sanatec" as its
trademark.

30

In holding that the cancellation of a federally registered trademark is not


immediately appealable, the majority has deprived Compression Polymers of

the means for reviewing the propriety of the district court's cancellation order.3
Without appellate review, Compression Polymers is simply not free, as Santana
Products suggests, to continue its use of the trademark "Sanatec." If
Compression Polymers continues to represent that it has proprietary rights in
the disputed "Sanatec" mark, it does so at the risk of being held liable for
damages, and possibly at the risk of receiving other sanctions as well.
Cognizant that this situation leaves Compression Polymers between the
proverbial "rock and a hard place", I would recognize that the district court's
order has the practical effect of granting an injunction, and conclude that the
cancellation order is appealable.

There are three other defendants, Sanatec Industries, Inc., which is a


corporation related to Compression Polymers, and two of their corporate
officers. We have no need to mention them further in our opinion as
Compression Polymers registered the trademark with the Patent and Trademark
office

Santana Products disputes that the order is designed to take effect immediately
because the district court has not yet certified the order to the Commissioner of
Patents and Trademarks as provided in 15 U.S.C. 1119. We do not address
this contention because, even assuming that Santana Products is wrong on this
point, the order nevertheless is not injunctive

Inasmuch as Wrist-Rocket clearly is distinguishable, we do not comment on


whether we agree that an order for cancellation should be appealable when it
accompanies an interlocutory injunction

This case is distinguishable from American Motorists Insurance Co. v. Levolor


Lorentzen, Inc., 879 F.2d 1165, 1172-73 (3d Cir.1989) in which we found the
order granting Levolor Lorentzen, Inc.'s motion for partial summary judgment
with respect to the obligation [of AMICO] to provide a defense was not
appealable. In that case, the district court, while effectively defining AMICO's
duty, did not order it to undertake the defense, thus the order could not be
enforced pendente lite by contempt. In our case, there is an order that is
enforceable by contempt

The fact that Compression Polymers may still have federal common law or state
trademark protection is of no import. Compression Polymers should not be
required to forego the benefits of federal trademark legislation simply because
other forms of trademark protection may be available

Had Santana Products specifically sought an injunction against Compression

Polymers' use of the "Sanatec" mark, we clearly would have had jurisdiction
over this dispute. See Wrist-Rocket Mfg. Co. v. Saunders Archery Co., 516
F.2d 846 (8th Cir.), cert. denied, 423 U.S. 870, 96 S.Ct. 134, 46 L.Ed.2d 100
(1975) (appellate court had jurisdiction to review order of cancellation and
injunction against use of trademark). Santana Products, however, in its motion
for partial summary judgment, did not seek an injunction enjoining
Compression Polymers' use of the disputed mark. Rather, Santana Products
asked the court to grant equitable relief, to the same effect, by directing the
Commission of Patents and Trademarks to cancel Compression Polymers
trademark registration for the mark "Sanatec"